4 Steps to Creating Good Credit

As a consumer you’ve learned the importance of
establishing a good credit rating with your lenders.  Whether you are shopping for a new home or auto, or searching for the best deals on insurance, your credit worthiness will be judged by your credit rating or credit score.

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A bad credit history or bad credit habits will place “black marks” on your credit profile.  These include things such as late payments, having an account assigned to a collection agency, and of course bankruptcy.

Establishing good credit habits and therefore a good credit rating will improve your credit worthiness.   This will be reflected in potential lenders offering you substantially lower interest rates and better deals on credit offers.

Here are 4 tips to help you create a shining credit profile:

1) Pay Your Bills On Time

Lenders only have your past payment history on which to decide the type of credit risk you present to them.  How you pay off your debts now indicates to them how you will pay off future debts.

2) Don’t Use Too Many or Too Few Credit Cards

How much is too much ? How little is too little ? Many credit experts and financial planners suggest two to four credit cards is just the right mix.  

3) Pay At Least The Minimum Due

Always pay at least the minimum due payment, but never less.  And remember, just paying the minimum payment means it will take you years and years to pay off that credit card.

Example: Paying off a $2,000 credit payment at 18% APR with a minimum monthly payment of 2% ($40 dollars or less) will take you 30 years to pay off the amount plus interest.

4) Review Your Credit Report Regularly

Monitor your credit report from all three major credit bureaus - Experian, TransUnion, and Equifax - on a regular basis.  Check your credit profile at least annually.   Review it carefully and make sure that any past mistakes or disputes have been corrected.

Also, if you notice an account listed that you know that you have not personally opened, contact that creditor and the credit bureaus immediately.  This could be a sign that you’ve had your identity stolen.  Request to have a fraud alert placed on your profile and account to protect yourself and your credit.  Identity theft is the fastest growing consumer crime in America, with an estimated 1 million people victimized each year.

Establish good credit habits early in life and reap the benefits that your good credit rating will provide you for the rest of your financial future.

3-in-1 Credit Report Is Car Buyer's New Best Friend

You've researched the perfect car to buy and the perfect time to buy it. But have you checked your credit report and credit score? A quick review of your credit report online before you visit dealerships can save you both time and money when you are ready to make your deal.

1. Give that credit report a tune-up.

Check your credit report early in the process to avoid embarrassing or costly episodes at the loan desk.

• Get the facts first. Having your 3-in-1 credit report from TransUnion's TrueCredit.com before you shop for a vehicle allows you to compare and review your financial information from each of the three credit bureaus: TransUnion, Equifax and Experian.

• Check the accuracy of your 3-in-1 report. If you find any mistakes, report them immediately.

• Are your credit card balances high? Reducing these or paying off small debts can sometimes boost your credit score and save you money on a loan.

• A few months of prompt bill payments can improve the way lenders view you.

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2. Don't overextend yourself.

Brand new sports car vs. used and practical? Before you decide which car is right for you, it's a good idea to see how much you can really afford.

• After all your other bills are paid each month, how much do you have left to put toward a vehicle?

• Do you have a trade-in or down payment? These can help you negotiate a better rate with lenders and can be especially important if you have problem credit.

• Calculate your debt-to-income ratio by dividing all your monthly payments by your gross monthly income. Make sure to add in your expected new car payment. A ratio greater than 30 percent may be a red flag to lenders.

3. Do your financing homework.

Applying for an auto loan doesn't have to be stressful if you arrive prepared. Consider the following:

• Be ready to discuss your income, occupation, home loan and credit history.

• To negotiate the best loan, check the rates banks and credit unions will offer you before visiting a showroom to make your final deal.

With these tips and your credit report from TransUnion's TrueCredit.com in hand, you should be well-equipped to negotiate a better deal on your next car. Now, go get 'em!

3 In 1 Credit Report - Getting A Copy Of Your Credit Report And Seeing What Needs To Be Improved

If you are concerned about identify theft or regular credit monitoring, you likely understand the importance of obtaining a copy of your free personal credit report. Neglecting to monitor your credit may prove damaging in the long run. It does not take long for a person to access your information and begin opening accounts in your name. For this matter, consumers are advised to obtain a 3 in 1 credit report every six months.

Benefits of a Credit Report

Aside from protecting yourself against identify theft, credit monitoring is essential for improving your credit rating. Although lenders use credit reports to judge a loan applicant's creditworthiness, credit reports are also beneficial because they keep us informed of our credit standing. Thus, we can know our odds of obtaining a home loan, auto loan, etc.

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How to Get a Copy of Your Credit Report

Getting a copy of your 3 in 1 credit report is simple. Furthermore, because reports are viewable online, there is no valid reason not to check your report at least once annually. Every city across the country has a local credit agency which will issue copies of your credit report from all three bureaus. However, if you prefer the convenience of the internet, there are various websites offering 3 in 1 reports for a small fee.

To obtain a copy of your personal reports, you must provide information such as name, address, social security number, etc. Once your information is verified, credit reports are either sent via email, or viewable from the website. Your entire credit history will show before your eyes.

Why Obtain Copies of a 3 in 1 Credit Report?

If you are hoping to improve your credit rating, obtaining a 3 in 1 credit report should be the first step you take. This way, you know exactly what needs improving. The report will list all creditors, current balances, and account standing. Moreover, you should review your report for errors. If inaccuracies are present, contact the bureau and discuss clarifying the matter.

In addition, credit reports include a credit score. This 3 digit number carries a lot of weight. Low scores indicate bad credit, whereas high scores equal good credit. If the goal is to improve credit score, it may be wise to improve in certain areas. For example, avoid late or skipped payments, reduce debt to income ratio, settle collection accounts, and limit your number of credit inquiries.

3 Free Credit Reports For You

If you were to tell someone that they can have a certain item for free, more than likely their response would be, “what’s the catch?” In the case of credit reports there is no catch, you can now get a free copy of this report through the three credit reporting agencies: Equifax, TransUnions, and Experian. Let’s take a look at the law and how you can benefit from it.

An amendment to the federal Fair Credit Reporting Act (FCRA) requires the three national credit reporting agencies to provide one free copy of your credit report to you annually. Beginning on December 1, 2004 and culminating on September 1, 2005, the Federal Trade Commission is requiring that these agencies offer reports on a rolling, phase in basis. In other words, on December 1, 2004, if you live in certain western states you became eligible at that time and every three months later additional states were added. By September 1, 2005, residents of all states are eligible.

Fortunately for consumers, you need not contact the three reporting agencies separately to obtain your free credit report. You can order right online at www.annualcreditreport.com; or by calling 877-322-8228; or by completing the Annual Credit Report Request Form and mailing it:

Annual Credit Report Request Service
P.O. Box 105281
Atlanta, GA 30348-5281

The form is available online where you can print it out and mail it in: www.ftc.gov/credit.

If you need copies more often, you can contact the three reporting agencies and request copies. You will pay for this service.

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To buy a copy of your report, contact:

Equifax
800-685-1111
www.equifax.com

Experian
888-EXPERIAN (888-397-3742)
www.experian.com

Trans Union
800-916-8800
www.transunion.com

There are also private companies who will obtain all three copies of your credit report for you as well. There is a fee involved, but you may find their services to be less of a hassle than contacting the three companies separately.

So, how can you benefit from the law? By ordering copies of your reports from the companies on a four month rotating basis. Most consumers will find this plan to be sufficient and it will allow for you to compare/contrast the reports of each agency. Of course, if you already suspect fraud you will want to order all three reports at once and notify each agency to place a "fraud alert" in your credit file.

All in all, the new law is a big win for consumers. Take advantage of this "windfall" as soon as you become eligible to do so.

0 APR credit cards are Not Just for Christmas

0 APR credit cards are here to stay. Now that we're well into the New Year we've learned (again) the lessons of the festive season. Zero interest credit is a nice idea, but why not extend it beyond your present credit card to the next, and the next. This seven point checklist will assure the clever consumer of having that constant low APR credit for years to come.

1. Read the small print. Make sure it matches the offers on the credit card's advertising copy. In particular, check for clauses that differentiate between purchases and cash transfers, or even cash withdrawals. Check that the card doesn't stipulate a ratio between purchases and cash, charging an excess if the cash activity rises above the purchase activity (that is usually the way it is biased, but check to make sure).

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2. Keep to the agreed credit limit as specified in the agreement. Do not exceed the balance limit as specified on your original agreement, or that'll be the trigger for extra charges.

3. Pay at least the minimum charge in full. Even better, set up a standing order or direct debit with your bank. You can arrange to have the minimum paid directly and electronically from your bank account every month.

4. Avoid late fees by paying on time. There is a danger with people who have the benefit of a 0% APR credit card that they will tend to become complacent about it and forget to pay it. Yes, it does happen. But every time a payment is received late credit card providers can and will charge a late fee. This can add up, especially if someone is habitually late. Again, an automatic direct debit from your bank account is the best answer.

5. Factor in any extras in the agreement, as stated in the small print (which you will have read). For example, an annual charge may be applied to offset the 0 APR. Some 0% APR cards do this but others do not. Bear in mind that the whole APR concept was meant to level the playing field as far as extra charges were concerned. By paying an annual charge for your card you are not truly getting a 0 APR card.

6. Make sure you have in mind a new low interest or 0 APR credit card waiting by to which you can transfer the balance of your present credit card. Why have 0 APR credit for 6 months or 12 months when you can have it for years and years? Always check the press and financial columns for new deals and credit card offers with this in mind. Join an Internet forum that specialises in such matters.

7. Make sure that you transfer the balance of your existing credit card to your new credit card in full and on time. In particular, allow for time to process the balance transfer and for all the paperwork involved (yes, even in the age of the Internet there is still a certain amount of paper involved!) and be careful to check that the opening balance allowed on your new 0 APR credit card is at least the same or exceeds the balance that you wish to transfer from your existing credit card, or the shortfall will cost you money!

0 APR Credit Cards

How many pieces of plastic do you have? Are you a credit card fanatic? You know, one of those individuals that acquire as many credit cards as possible? Now, first of all, this may get you into a serious financial bind. Sure, credit cards are a great way to deal with an unexpected expense, and can no doubt save your butt at times. However, these tricky little cards can also dupe you into spending carelessly. We all know their typical spiel. Those clever credit card companies know just what you want to hear. That's why your mailbox is consistently filled with offers for 0 apr credit cards. They love to pitch that; don't they? Let's face it; we all light up at the number 0. It immediately tells us that we won't lose anything. Ha, that's a good one. But, while these 0 apr credit cards start out benign, they soon turn sinister. Suddenly the apr is through the roof, and you're shelling out tons of cash for interest rates every month.

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When you checked your mailbox today, were there any pitches for 0 apr credit cards? I'm going to go ahead and guess there was at least one. Now, the question is; are you going to rip it open and read the whole deal, or simply tear it apart and throw it away? Don't get me wrong, we all like to have a credit card or two in our wallets and purses. Those 0 apr credit cards can come in handy if we get in a bind. The trick is using it wisely. This basically translates as not using it unless you have to. And I mean have to! There's no reason to stick something on your 0 apr credit cards if you can already pay cash. Why grapple with the monthly credit card payment? Or maybe you're one of those rare individuals who pay their credit cards off completely each and every month. If you are, then many congrats to you. You're one of few. Although many of us, or probably most of us claim that this is how we will do it, we actually don't. Believe me, the credit card companies count on this. In the end, you'll probably want one of the 0 apr credit cards for some emergencies. The trick is staying strong and not using it for random shopping. If you are in search of current deals on 0 apr credit cards, then I suggest you get online. It's easy to pop open Google and do a quick search regarding 0 apr credit cards. However, be prepared, because loads of them are about to pitch to you.

0 APR Credit Card – Truths and Traps

If you are struggling with ever-increasing credit card debt, a 0 APR credit card could be the magic wand for you. There are a number of 0 APR credit cards in the marketplace. These 0 Interest credit cards offer cardholders zero percent on new purchases and certain 0 APR credit card offers also allow balance transfers, lowering the interest burden even further.

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The Truth About 0 APR Credit Cards

These types of 0 APR credit cards are offered by popular credit card lenders including American Express, Citibank, Chase, HSBC, and Discover. These cards have many benefits to offer if you have a good to excellent credit rating.

Keep in mind, that the zero percent offered with these cards is not permanent. It is an introductory rate and is typically offered for ninety days to as long as 12 months. At the end of the interest-free or zero percent periods, cardholders will have to pay a higher ongoing interest rate. Generally, these rates could vary between 10 % - 14% and sometimes can be as high as 24%.

A 0 APR credit card is ideal when you want to purchase something expensive but cannot find another way to finance it. There will be no interest charges for the in and you will have the introductory buffer period to pay off the expense. But buyer beware ... make sure you can pay the purchase off before the introductory APR expires.

Most 0 Interest credit cards allow balance transfers from your existing higher interest cards and many will waive the transfer fees. This is one of the best methods to pay off debts at a faster rate, leading to substantial savings on the interest charges incurred.

It is possible that a single credit card can have multiple APRs including the following:
1)  One APR for balance transfers, one for purchases, and one for cash advances – the APR normally would be higher for cash advances compared to balance transfers and purchases.
2) Tiered APRs – Different APR levels can be assigned for different account balance levels or tiers, e.g., 15% for balances between $1 - $500 and 17% for balances higher than $500, etc..
3) Introductory APR – 0 APR as the introductory offer and a higher rate upon expiration of the introductory period. 
4) Penalty APR – A penalty APR rate may apply if you are late with your payments.

The Traps to Watch Out For:
A 0 APR credit card is an attractive proposition, and often is too tempting an offer to resist. However, it is essential to be informed about the often-untold catches in these lucrative offers.

1.  The 0 APR is a Limited Time Offer – In general, the 0 APR offered is only for a limited period. The period could vary from 3 months to 12 months. This implies that purchases made during this period will not attract any interest. You need to be cautious about the expiry period and remember to pay off before the period ends inorder to avoid hefty interest charges.

2.  Once the introductory period is over, the 0 APR credit card may have a ridiculously high interest rate like 20% or higher.

3.  On-Time Payment – Most of these 0 Interest credit cards require you to pay the minimum payment on time every month during the introductory period. Late payments will result in penalties that include shifting the remaining balance to a much higher APR.

4.  Complete Payment – Certain 0 APR cards require you to pay off the balance entirely before the expiration period of the introductory offer.  If not, the default high interest rate could be applied to the entire balance. Ensure that you understand these credit card terms clearly.

5.  Applicability of the 0 APR – Most of the 0 Interest cards offer the 0 APR on new purchases and balance transfers in the introductory period. However, there are some cards that offer 0 APR on balance transfers only with higher applicable APR's on new purchases.

6.  Other Fees – Some credit card companies compensate the 0 APR by charging high annual fees or transfer fees on balance transfers.

7.  Cap on Balance Transfer – Certain cards may have a cap or limit on the balance transfer amount. This means that the 0 APR will apply only for the amount within the cap limit and anything more will be charged the default higher APR.

While it may be an attractive offer to go for 0 APR credit cards, it may not be a wise decision in certain scenarios.  So, before you seriously consider a 0 APR credit card, it is essential to compute credit balances, interest rates, and your pay off capability. Read the terms and conditions carefully to avoid credit traps.  Understanding the fine print could have substantial savings apart from trouble free credit rating.

0% Credit Cards: Are They Worth It?

Credit card jumping has become a common practice. The term refers to the habit of moving debt balances from card to card to take advantage of preferential rates. But just how worthwhile is credit card jumping for consumers?

UK consumers have staggering levels of debt. Consumer borrowing has grown by more than 50% in five years. It's no wonder that people are looking for new ways to ease the debt burden. Credit card jumping offers one possible solution.

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People who are carrying large amounts of debt can save hundreds of pounds in interest simply by taking advantage of the latest credit card balance transfer deals. Many of these offer a 0% interest rate for a fixed period, such as three, six, nine or even 12 months.

As well as transferring balances from other credit cards to a 0% credit card, consumers are sometimes able to transfer balances from store cards and even outstanding loan amounts.  It is worth checking to see if these transactions also benefit from the 0% balance transfer rate.

Transferring a balance to a 0% credit card means that any payments made are paying off the principal rather than the interest. This reduces the amount owed, which is good news for those using this as a debt management method. Many card issuers do charge a balance transfer fee to curb the practice of credit card jumping, so it is worth looking around for the best deal.

Getting The Best From Credit Card Jumping

To get the best from 0% credit cards, many savvy consumers move from card to card when the preferential rate period expires. This requires some organization, but credit card jumping can mean that debt balances continue to go down as consumers move money (or rather, debt) from card to card. Those who don't move their debt at the right time often find they are paying a much higher interest rate – and the debt is not being cleared. This strategy works best when consumers pay on time. Late payment can result in fees that increase consumers' level of debt.

Consumers who are using many credit cards to manage their debt should consider creating standing orders to manage payments automatically. It is also worth using a spreadsheet or calendar program to keep track of when it is time to move to the next credit card.

Other Incentives

Credit card jumping can be an effective way of reducing debt, providing consumers do not add any new debt. There are also other incentives for using 0% cards, such as charitable contributions, rewards points, air miles, travel insurance and much more. It is worth shopping around to get a reward as well as the interest-saving rate.

Summary

Credit card jumping can be a good strategy for people who are:
1. organized about managing debt
2. trying to clear a large debt
3. prepared to shop around for the best balance transfer deals
4. able to pay on time consistently so as not to damage their credit rating.

0% Balance Transfer Credit Cards Will Not Last

Have you ever been attracted to a credit card because it promises you an outstanding interest rate that seems just too good to be true? Most of us have at some stage jumped for one of these attractive offers. There are a growing number of credit card providers out there that will offer you 0% deals on either balance transfers or purchases, and sometimes they just seem too good to resist.

Particularly if you have a large outstanding credit card balance that you are currently paying a lot of interest on, these offers will be very tempting. In fact, many 0% balance transfer offers will save you hundreds of pounds on interest that you would otherwise have had to pay on your credit card balance. But no matter how attractive such offers may appear at the time, you should only ever take on another credit card if you have taken the time to review your finances and are satisfied that it is the right financial move for you at this time.

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To look at a typical example, suppose you have one thousand pounds outstanding on a credit card that charges 10% APR. This means that over the course of a year, this balance will cost you 100 pounds in interest charges. Now suppose you find a credit card that offers you 0% on balance transfers for six months. Well it is pretty obvious that 0% is better than 10 and if you were to take up this offer, assuming there are no balance transfer fees, then how much will you have saved over the six month interest free period? The answer is 50 pounds. However, what will the interest rate revert to once the interest free period has come to an end? This is something you should be thinking about before you opt for the credit card, and not when the interest free period is about to expire and everything is more urgent. Suppose, for the sake of our example that the interest rate reverts to a rate of 25%. This means that over the next six months you will pay £125 in interest.

While this is a very simple example, it illustrates an important point when it comes to 0% balance transfers. In the example above if the customer had stayed with his 10% card, he would have paid £100 in interest over a 12 month period. In the same period, by opting for a 0% balance transfer for six months that then reverted to 25%, he ended up paying £125.

The point to remember is that just because a credit card offers you 0% does not mean it is the best deal out there. Look at the long term rates that the card will offer you, and compare these to the rates you are already getting from your credit card. If your existing rate is better than the rates that you will get from the new card once the introductory offer expires, then maybe you should remain loyal to the card you have.

So while this is going on you will not be spending on the new credit card, but you will be safe in the knowledge that you are saving the interest payments on the old debt.

0% Balance Transfer Credit Cards - Too Good to be True?

On the surface, 0% balance transfer credit cards are incredibly enticing, especially if you have outstanding credit card balances.  But there are a few details you need to understand before taking the balance transfer credit card plunge.

Some consumers seem to get in trouble overnight with credit cards.  Seemingly broke and deeply in debt, some desperate card holders are constantly on the lookout for a quick fix for the credit problems.  A 0% credit card balance transfer
might appear to be the perfect solution.  Many among us desperately jump at such offers without much forethought. 0% deals on balance transfers or purchases might seem irresistible even to the most credit worthy person.  But especially if you have a large outstanding card balance (or balances), a 0% credit card balance transfer will seem especially lucrative. And to no surprise, there is no shortage of these type of balance transfer offers currently available in the marketplace.

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Regardless of your credit circumstances, you should exercise caution and thoroughly investigate all aspects of any credit card offer that you consider. Despite the obvious attractions of a balance transfer credit card, it is worth giving a second thought before you cut up your old credit card to make room in your wallet for the new one. Companies often fail to clarify the fine print, hiding those rather unpleasant details which could cost you dearly in the long run.

Let us start with a very typical credit scenario.  Imagine having a $10,000 outstanding balance on a credit card with a 10% annual APR, translating to $1000 in finance charges on a yearly basis. On the other hand, imagine securing a credit card that offers you 0% on balance transfers for the first year of membership.  Transferring your card balance to a 0% balance transfer offer would cut down your annual interest expense by $1000. Exciting, isn’t it?

But did you bother to check what the interest rate would be after the introductory interest-free period? The rate might turn out to be significantly higher than your existing card, and you do not want to be caught on the wrong side of a high APR.  Forewarned is forearmed. You will need to plan ahead – and not just a day or two before the interest-free period comes to an end.  Some consumers might be surprised to discover that when an introductory APR offer expires that the rate of interest can revert retroactively to an APR of 23% and beyond.  If you do not pay off your balance systematically and end up with a large balance when the introductory offer expires, many times consumers are stuck paying out an outrageously high APR because they did not pay down their card balance at all.  So above all, make sure to plan on paying off that balance before the introductory period expires or you may regret it.

0% Balance Transfer – Some Pointers

When considering balance transfers credit cards, help yourself by asking these questions:

- What will be the interest rate once the initial introductory 0% balance transfer period is
over?
- Is it comparable to my current APR or will it be significantly higher? What is the net difference?
- Particularly if you plan to carry a card balance over time, what will be the long-term net effect of the difference in APR's?
- Do I want to get into the habit of switching from one 0% balance transfer card to another?

If your current credit card offers a better long-term ongoing APR than the new one, it makes more sense to stick with what you’ve got, especially if you have the means to pay off your card balance without incurring large finance charges.  A balance transfer card most certainly has its own pros and cons but if you wish to use balance transfers to your advantage, make sure that you understand the net benefits of the card over the long term.